Report: Financial Restatements Doubled

Washington (June 12, 2002) -- Financial restatements by public companies have reportedly more than doubled over the last five years, with most revisions involving improperly recognized revenue on transactions, according to a consulting group.

The Huron Consulting Group said the number of restatements more than doubled, to 270 last year from about 120 in 1997, Bloomberg News reported.

Huron Consulting reviewed SEC filings by companies during the five-year period that ended Dec. 31 and only counted restatements that resulted from errors -- not restatements because of changes in accounting principles or nonfinancial issues, according to the news report.

The top reason for restatements, cited in roughly 20 percent of the cases, came from companies improperly recognizing revenue on transactions. The second leading reason was the handling of reserves and contingency funds, which caused 12.6 percent of restatements, the report noted. The majority of restatements (51 percent) came from companies with annual revenue of less than $100 million.

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